This site uses cookies to store information on your computer. Some are essential to make our site work; others help us improve the user experience. By using the site, you consent to the placement of these cookies. Read our privacy policy to learn more.

CPAs expect modest difficulty applying revenue recognition standard

Finance executives in the United States expect modest difficulty
implementing the sweeping, global changes in revenue recognition that
are coming their way, according to a new survey.

In the second-quarter AICPA Business and Industry Economic Outlook
Survey, released Thursday, CPA executives explained their expectations
for the assimilation of the new revenue recognition standard into
their accounting and business processes and systems.

Among those who will be affected and expressed an opinion, more than
one-third (36%) said it will be neither difficult nor easy to
assimilate. Another 36% said it will be at least somewhat difficult to
assimilate. Just 6% said it would be difficult, but 30% said it would
be somewhat difficult to assimilate.

Twenty percent said it would be moderately easy to assimilate, and
8% said it would be very easy to assimilate.

Nearly one-third (32%) of the survey respondents said the new
standard will not affect their company’s revenue recognition
practices, and 14% said they don’t know what the effect would be.

FASB and the International Accounting Standards Board (IASB) are
scheduled to release the new standard within a few months. The
standard, as proposed, would call for revenue recognized
to represent the amount a company expects to be entitled to receive in
exchange for the transfer of promised goods or services. A five-step
process has been proposed to identify the amount.

The boards have tentatively decided that the standard will take effect for
reporting periods beginning on or after Jan. 1, 2017, to give entities
time to update their software systems and processes.

Andrew Barbe, CPA, CGMA, vice president for accounting and senior
controller for Texas-based NorTex Midstream Partners LLC, plans to
spend extra time with his staff so that they will be fully engaged and
understand the impact of the new guidance.

“It will have impact,” Barbe said. “…I think with the new guidance
coming through, we’re going to be able to meet that for the most part
already as it stands today, but it will add some complexity to what we do.”

The challenges of the new lease accounting standard have been pervasive to say the least. In this free, independently-written report, you'll learn effective adoption strategies as well as resources for easing the transition to the new standard.